Gold turns soft on Fed move, eyes Rs 31,600

Commodity Summary

MCX

Gold prices moved lower on Friday as the dollar strengthened after the US Federal Reserve kept interest rates steady with a fourth hike for this year expected next month.

White metal silver prices dropped into the red. Crude prices also inched down further as rising supply and concerns of an economic slowdown pressured prices. US crude is now down by 20 per cent since early October.

How are various commodities lined up today? Here are some projections from brokerage SMC Global Securities.

Bullion: Gold can take support near Rs 31,250 and face resistance near Rs 31,600 on MCX. Silver can find comfort near Rs 37,200 with a barrier near Rs 38,000.

Energy: Oil prices fell to the lowest in more than six months on signs that US supply is accelerating and on speculation that American sanctions against Iran won’t succeed in reducing exports to zero. Chana futures (December) are likely to trade on a bullish note in the range of Rs 4,340-4,480 levels on reports of lower sowing this rabi season.

Crude oil may trade with weak bias as oil prices remained weak as rising supply and concerns of an economic slowdown pressured prices, with US crude now down by 20 per cent since early October. The decline in prices over the past weeks follows a rally between August and October when crude was pushed up ahead of the re-introduction of sanctions against Iran's oil exports on November 5.

These sanctions, however, will unlikely cut as much oil out of the market as initially expected as Washington has granted exemptions to Iran's biggest buyers which will allow them to continue buying limited amounts of crude for at least another six months.

Crude oil can take support near Rs 4,400 and resistance near Rs 4,470 on MCX. Natural gas may trade with a sideways bias as it can move in the range of Rs 252-261 on MCX. US natural gas futures held within a few cents of a 9-month high for a third day in a row on Thursday as forecasts for colder weather next week offset a bigger than expected weekly storage build.

Base metals: Base metals prices may move in the red tracking weak international markets. Copper is staring at headwinds near Rs 445 and can take support near Rs 435. China, which consumes nearly half the world’s copper, registered a 19 per cent month-on-month fall in copper imports in October, available data showed.

London three-month copper slid on Friday, with the market on track for its sharpest weekly drop since mid-August, as the dollar ruled firm following a US Federal Reserve meeting. Chile’s copper production from January to September this year jumped 7.3 per cent from a year earlier, boosted by a sharp increase in production at BHP. Zinc can face resistance near Rs 187 and support near Rs 183.

Lead can be better-off near Rs 142, with upside likely to be capped near Rs 146. Nickel can take support near Rs 845 while its upside may be limited near Rs 865. Aluminium can take support near Rs 143 levels while it has resistance near Rs 146 levels.

Spices: Turmeric futures (December) are likely to trade with a downside bias and witness selling pressure with every rise and test Rs 6,500 levels. Jeera futures (December) are likely to move with an upside bias taking support near Rs 21,840 levels owing to the rise in demand and prospects of lower area under the crop.

Oilseeds: Soybean futures (December) are expected to move sideways in the range of Rs 3,400-3,455 levels. Demand in soybean is said to be good from crushers as they are buying the commodity on bulk scale amid good overseas commitments for soymeal. Further domestic demand for soymeal is also said to be good from consumption centres.

Mustard futures (December) are expected to trade with a downside bias in the range of Rs 4,155-4,230 levels. Farmers in the country had sown mustard across 2.78 million hectares as of Thursday, up 4.8 per cent on year, according to ministry data.

CPO futures (November) are looking bearish as these can plunge towards Rs 550-545 levels. Malaysian palm oil futures fell nearly 1 per cent on Thursday and hit a fresh three-year low on worries that rising production would add on to inventories.

Other commodities: Cotton futures (December) are expected to take support near Rs 22,400 levels and trade with an upside bias. A sideways trend can be seen in guar seed futures (December) as it may trade in the range of Rs 4,645-4,745 levels. The weakness in crude oil and global financial market is denting demand for guar gum from overseas markets.